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Initial unemployment claims continued to decline as February came to a close, providing hope to jobless workers in the midst of debt consolidation who are looking for a sign the struggling housing market may slowly be righting itself.

According to the U.S. Department of Labor’s latest Employment Insurance Weekly Claims Report released on Thursday, initial unemployment claims stood at 469,000 for the week ending February 27, 29,000 fewer than there were one week earlier. The 4-week moving average of initial claims also dipped slightly to 470,750, a decline of 3,500.

Using the most recent data available, the survey also found that the advance seasonally adjusted insured unemployment rate stood at 3.5 percent for the week ending February 20, a decrease of 0.1 percentage point from the prior week’s revised rate.

Because of that, the survey also found that the number of jobless workers receiving unemployment during same the week stood at 4.5 million, a decrease of 134,000 from the previous week’s revised figure.

Additionally, the survey found that during the week ending February 20, only seven states saw an increase in their initial claims, with New Jersey leading the way with 4,879 new claims that were attributed to a backlog caused by weather-related office closings and a statewide furlough day.

Conversely, 12 states saw a decrease in claims of more than 1,000, with California leading the way with 12,000 fewer declines due to decreases layoffs in the service industry.

Consumers looking to consolidate debt who live in Pennsylvania may benefit from tax cuts being proposed by Governor Edward Rendell to close an upcoming budget deficit.

The proposed reductions would lower the state sales tax rate from 6 to 4 percent in all areas except Allegheny County, which would see its rate lowered to 4.7 percent. The sales tax in Philadelphia, which currently sits at 8 percent, would be lowered to 5.3 percent as well.

Rendell rationalized the declines as a means to lower costs for consumers who are consolidating debt and looking to buy a new vehicle. The lower rates would result in nearly $500 in taxes that could be saved by consumers.

"My proposal lowers our sales tax rate by a third, increases the fairness of our business and sales tax systems and helps our state avoid the financial crisis that we know is only 18 months away," Governor Rendell said. "We will eliminate special interest exemptions on items except necessities like food, clothing and medications, and increase fairness because every item not subject to the sales tax makes the tax on everything else far too high."

Revenue collected from sales generated by the lower taxes would be used to cover the estimated $2.3 billion budget deficit the state expects to have in 2011 once Rendell leaves office.

Americans are improving their methods of consolidating debt in the new decade and paying down the amounts they owe at a higher level than in the past, according to a new survey from BillShrink.

After asking for insight into the personal finances of more than 150,000 people who were lookingfor advice on how to manage their credit cards in February, 59 percent responded that they still managed to pay off their credit card balance in full every month.

In comparison, the same survey taken one year earlier during February 2009 found that only 46 percent of respondents said they were finding ways to pay off their credit cards in full on a monthly basis.
"The recession of 2009 was a wake-up call for many Americans who were spending beyond their means," said Peter Pham, CEO of BillShrink. "Now we’re seeing people spend wisely and monitor their expenses carefully so that they can begin building a rainy day fund."

Improved management of consumer debt is only one of many financial signs that the economy is slowly on its way out of the economic doldrums seen during the past two years. On Monday, TransUnion reported that the number of auto loan payments that were 60 or more days past due had remained stable during the third and fourth quarters of 2009 at 0.81 percent.

The figure also showed the year-over-year delinquency rate at the national level had decreased by 5.81 percent during the fourth quarter.

Homeowners saddled with bad credit mortgages who are looking to refinance as a means to consolidate debt finished up a disappointing week of rate increases with more rate hikes, according to the latest Primary Mortgage MarketSurvey by Freddie Mac.

The survey, which was released last week, found that only 1-year fixed-rate mortgages saw their average rate decrease during the week ending February 25 as it fell by 0.08 percentage points to 4.15 percent. The continued decline dropped the average rate even further away from the 4.81 percent rate it had averaged one year earlier.

After remaining under the 5 percent threshold for the last three weeks, the average rate for 30-year fixed-rate mortgages increased by 0.12 percentage points to hit 5.05 percent for the week. The increase only put the rate slightly below the 5.07 percent average rate documented by Freddie Mac at the same time last year.

The average rate for 15-year FRMs also increased over the course of the week, tacking on 0.07 percentage points to hit 4.4 percent for the week. One year earlier the average rate had averaged 4.68 percent.

"Interest rates for 30-year fixed mortgages followed long-term bond yields higher and rose above 5 percent this week amid a mixed set of economic data reports," explained Frank Nothaft, Freddie Mac’s vice president and chief economist. "For instance, the January producer price index jumped well above the market consensus, but the consumer price index remained subdued and consumer confidence declined to the lowest level since April 2009, according to the Conference Board."

For homeowners falling behind on mortgage payments and in need of debt consolidation, a short sale of the home at a price lower than what they still owe on it may seem like the only viable option.

However, before going through with a short sale, one should consider the potential consequences and take appropriate actions to prevent them from becoming a reality.

According to Frank Alexander, a member of the board of directors of the Consumer Credit Counseling Service of Greater Atlanta and a law professor at Emory University, homeowners who engage in short sales can often leave themselves open to a lawsuit by their mortgage company looking to recoup the remaining amount owed on the house.
"A borrower facing a foreclosure should assume that a post-foreclosure lawsuit is possible," said Alexander. "In addition, no homeowner should ever participate in a short sale without receiving a signed agreement clarifying that all outstanding debt has been forgiven. The same is true for all deed-in-lieu of foreclosure resolutions."

Homeowners can also leave themselves open for similar lawsuits if they simply decide to walk away from their mortgages and let the payments default. Alexander added that he felt homeowners should not risk leaving a home behind unless they are told they will not be on the hook for any of the remaining costs.

Consumers looking to refinance their mortgages in order to consolidate debt may not find a better time than now, as the latest Primary Mortgage Market Survey from Freddie Mac saw declines in all mortgage types during the weekending February 18.

The average rate for 30-year fixed-rate mortgages matched its decline from the week prior, shedding 0.04 percentage points to remain under 5 percent at 4.93 percent. One year earlier, the rate was north of the 5 percent threshold at 5.04 percent.

The average rate for 15-year FRMs fell as well, edging down 0.01 percentage points to 4.33 percent. A year ago at this time, the rate had averaged 4.68 percent.

"Mortgage rates eased for the second week, while economic data releases suggest that the housing market may be in a slow state of recovery," said Frank Nothaft, Freddie Mac vice president and chief economist. "The National Association of Realtors reported that existing home sales rose in 48 states and the District of Columbia between the third and fourth quarters of 2009; 32 states experienced double-digit growth."

The average rate for the 1-year adjustable rate mortgage saw the biggest decline of the week, shedding 0.11 percentage points to hit 4.23. Five-year ARMs also saw their average rate drop by 0.07 percentage points during the week to hit 4.12 percent.

Consumers may not find a much better time consumers may find that now is the time for debt consolidation and refinancing, with long-term mortgage rates now at their lowest point of the year.

According to the latest Zillow Mortgage Rate Monitor released on Tuesday, the average interest rate for 30-year fixed-rate mortgages dropped 0.02 percentage points to 4.79 percent for the week ending February 16. The decline, while notable, was only one-third of the 0.06 percentage point decline seen the week before.

Similarly, the average rate for 15-year FRMs fell during the week as well, falling 0.05 percentage points to hit 4.22 percent. During the first full week of February, the average rate had actually increased by 0.01 percentage points.

For the second straight week, the average interest rate for 5/1 adjustable-rate mortgages saw the largest declines of the week, shedding 0.09 percentage points to 3.61 percent. One week earlier the average rate had dropped by 0.14 percentage points.

Oddly enough, while the rates for the week were ideal for mortgage refinancing, the volume of mortgage requests dropped by 6.7 percent over the course of the week. Also surprising was the slight drop in refinance loans, which dropped 2.6 percentage points to 31.9 percent of all mortgage applications. The drop in refinance applications was made up by purchases, which increased by 3 percentage points to 66.3 percent.

Consumers who have been so good at consolidating debt in recent months should beware, as card mailing offers are back in full force and will likely not be too appealing to many.

According to the latest Synovate Mail Monitor, credit card mailings during the fourth quarter of 2009 increased substantially compared to the prior quarter, increasing 46 percent to 398.5 million offers to end the year.

Even with the increase, the Q4 2009 figures didn’t even come close to the 668.1 million offers that were mailed to homes one year earlier during Q4 2008.

According to Anuj Shahani, the director of competitive tracking services for Synovate’s Financial Services Group, the considerable year-end increase in offers was due to creditors’ attempts to adjust their business model in preparation for new rules that go into effect this month.

"The CARD Act, as well as the continued effects of the credit crisis and the slow-to-recover economy, has caused major anxiety to both consumers and businesses," Shahani said. "The timing of this legislation is questionable as it has been thrown at us at a time when we, as a nation, are already experiencing financial difficulties and aren’t in an ideal position to face additional headwinds."

Additionally, consumers may want to beware of any offers received from creditors, as they may not be the best offers available. The average purchase price APR for offers mailed out were 13.51 percent, the highest rate recorded by the monitor in the last five years.

American consumers are more worried about their financial stability in the new year, as the latest Country Financial Security Index saw the largest bi-monthly drop in its history in February.

The index, which was released on Tuesday, declined by 3.2 points to hit 63.1 in February. Following an increase in the index to end 2009, the most recent findings suggested that consumers had shifted their opinions on their finances and become more wary about where they stood.

The number of consumers who were confident their home, car, and possessions were adequately insured fell by 5 points to 79 percent in February, while the number of consumers who classified their finances as "good" fell 9 points to 35 percent.

Vice President of Country’s Financial Security Planning Keith Brannan said that consumer sentiments often suffered from seasonal doldrums in the beginning of the year as a need to consolidate debt accompanied the arrival of bills from the holiday season.

"This year’s decline is more severe, however, and probably represents the struggle to remain patient with our nation’s financial recovery," Brannan said. "If there is good news, it’s that most families can achieve financial security, even if it’s difficult to see the light at the end of the tunnel right now."

The survey also found that the number of consumers who said they had been putting money aside for savings had dropped 7 points to 43 percent.

Couples are expected to emphasize the fact that it’s "the thought that counts" this Valentine’s Day, as spending on gifts is expected to decrease as consumers continue to consolidate debt.

According to the National Retail Federation’s 2010 Valentine’s Day Consumer Intentions and Actions Survey, couples are expected to slash how much they spend on their spouse or significant other to an average of $63.34. The year prior, the NRF had found that the average consumer spent $67.22 on their significant other.

With the money saved on their significant others, the survey found that consumers seemed to be rationing their money amongst other friends and family for Valentine’s Day. The average person is expected to spend $5.37 on gifts for friends – an increase from $4.74 in 2009 – while also doling out $2.84 on co-workers – up from $1.94 last year.

"While some may view Valentine’s Day as cliché, many people still look forward to giving significant others, friends, family and even pets something special," said Tracy Mullin, the president and CEO of the NRF. "Rather than not give anything at all, consumers will instead focus on small, thoughtful gifts for the people who mean the most to them this year."

As for the types of gifts being considered for loved ones, the survey noted an uptick in purchases of essential items such as sweaters, winter accessories, and other clothing while gifts of jewelry and "an evening out" saw declines.